Working Capital Management

Teacher

Dr.Susanta Kumar Mishra

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Code(Credit) : MGFM-2314
(2-1-1)

Course Name : Working Capital Management

Course Objectives

  •  This course provides an understanding on how to manage Current Assets, working capital financing policies, increasing profits through working capital management and how to properly fund working capital
  •  The course also discusses the cash conversion cycle, Cash budgeting and credit policy and credit variables.
  •  Students are expected to be familiar with the Current Asset Management policy of any Organisation. They are expected to get hands on experience on any Organisation (e.g. Gram Tarang)

Learning Outcomes

• The students will be able to have a basic understanding of a company’s working capital structure.
• Understand how proper management of working capital increase profits
• Have an understanding of the various Working capital management policies
• Calculate the cash conversion cycle
• Establish knowledge of working capital in the budgeting process and credit policy

Course Syllabus

Module-I
Concept & Significance
Concept of working capital, Significance of working capital, Determinants of working capital, Operating cycle, Estimation of working capital, Risk-return trade-off of working capital, Working capital policies: Current asset policy and financing policy, Working capital financing,
Module -II
Inventory management:
meaning, Tools and technique of inventory management, EOQ, Various levels of inventory, inventory control (ABC and VED analysis);
Module- III
Cash Management
Cash management: Meaning, Objectives/Motives of holding cash, Determinants of cash needs and method for determining cash needs (Baumol Model and Miller-Orr Model).
Module-IV
Receivables management:
credit policy variables, evaluation of alternative receivable policy, collection policy, cost of receivables,

Suggested Books:
1. I M Pandey-Financial Management-Vikash
2. Prasanna Chandra- Financial Management-TMH
3. Khan and Jain-Financial Management-TMH
4. Sudhindra Bhatt- Financial Management-Excel

Session Plan

Session 1

Introduction to Working Capital,Concept of Working Capital ,Significance of Working Capital

Introduction and Concepts-converted

 https://youtu.be/hV2f6Ujv9zY

Session 2

Determinants of Working Capital,Significance of Working Capital

Determinants of Working Capital-converted

https://www.youtu.be/CuYN32IAWn0

Session 3

Operating Cycle,Estimating working Capital Requirement through Operating Cycle

Computation of Working Capital-converted

https://youtu.be/o2mUyzHfA_Q

Session 4

Various Policies of Working Capital,Aggressive Policy,Conservative Policy,Matching Policy

https://youtu.be/yj-XblabmFE

Session 5

Working Capital Financing: Banking Norms for Working Capital Financing

https://youtu.be/v8mVEZwZvtU

Working Capital Finance-converted

Session 6

Tandon Committee, Chore Committee and Dahejia Committee report on Working Capital Financing to Corporates in India

https://youtu.be/0cwhYK4NL.5w

Session 7

Maximum permissible Bank Finance on financing working capital as per Tandon Committee

https://youtu.be/EMOz2THGRjk

Session 8

Inventory Management:Meaning,Types of Inventory,Slow moving inventory and Obsolete items

Inventory Management-converted

https://www.youtu.be/2n9NLZTllz8

Session 9

Techniques of Inventory Management:LIFO ,FIFO,HIFO Method

https://youtu.be/84NaR45MWe4

Session 10

Economic Ordering Quantity,Ordering Level,Re-Order Level,Safety Stock

https://youtu.be/vMSARPybFxg

Session 11

Inventory Control Techniques: ABC Analysis and VED Analysis

https://youtu.be/vMSARPybFxg

Session 12

Cash Management:Meaning of Cash Management,Effective Cash Management

Management of Cash-converted

https://youtu.be/1SuHHul13nY

Session 13

Objectives and Motives of Holding Cash

https://youtu.be/L6AnyogzlfM

Session 14

Determinants of Cash Needs,Methods of Determining Cash Needs

https://youtu.be/L6AnyogzlfM

 

Session 15

Importance of Cash Budget ,Preparation of Cash Budget

Cash Management (Cash Budget)-converted (1)

https://youtu.be/Wrrm0ewgbyu

 

Session 16

Models of Cash Management

https://youtu.be/2A0UkOYPbRc

Session 17

Receivables Management: Meaning and Methods

https://youtu.be/lQizMVZPGog

 

 

Session 18

Credit Policy Variables

https://youtu.be/lQizMVZPGog

Session 19

Evaluation of Alternative Receivables Policy

https://youtu.be/_TfNfX5Q3rE

Session 20

Collection Policy and Cost of Receivables

https://youtu.be/_TfNfX5Q3rE

 

Case Study on ITC

Students must look into the Annual Report of ITC attached herewith.
i.They have to look into the Current Assets and Current Liabilities position of the Company and find out the ratios relevant to Working Capital.
ii.They should go to the notes on accounts (which are numbers given against the items of assets and liabilities ) and verify these for last five years to find out the changes in them .
iii.They should analyze the Changes in working Capital on the Profitability of the Company.
iv.They should Compare these with that of any other Company of Similar nature.
vi.Students can log into the site http://www.annualreports.com/Company/bce-inc where they can find 72,000 annual reports of 5,800 Companies.

ITC-Report-and-Accounts-2019

http://www.annualreports.com/Company/bce-inc

Case Study on Infosys 

Students must look into the Annual Report of Infosys attached herewith.
I.They have to look into the Current Assets and Current Liabilities position of the Company and find out the ratios relevant to Working Capital for last five years.
II.It is interesting to note that Infosys don’t have any long-term loans over last few years and they have very less short-term loans. Students should go to the notes on accounts (which are numbers given against the items of assets and liabilities ) and verify these for last five years to find out the changes in them .
III.Students should analyze the changes in working capital and should prepare a report how it affects their profitability and turnover.
IV.Students have to prepare a report on how the Current Assets and Liabilities position of an IT Company (which is a service provider company) is different from that of an FMCG Company.
V. They should Compare these with that of any other Company of Similar nature.
VI.Students can log into the site http://www.annualreports.com/Company/bce-inc where they can find 72,000 annual reports of 5,800 Companies.

infosys-ar-19

http://www.annualreports.com/Company/bce-inc

Case Study 

Studying the Inventory Management System of any Organisation(e.g.UMBC or GTET and suggesting changes required if any to improve profitability)

Case Study on Inventory Management

A Case Study on Inventory Management by using Economic Ordering Quantity Model of XYZ Ltd.

doc

Assignment

Comparing Reports of Various Committees relating to Working Capital Finance(Tandon Committee, Chore Committee and Dahejia Committee ) and analysing these reports.

Assignment

Assignment on finding the Maximum Permissible Bank Finance as per the Various Methods.

Assignment

Assignment on LIFO,FIFO,HIFO and Weighted Average Method

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